How to use Level 2 to improve your trading?

This is a discussion on How to use Level 2 to improve your trading? within the Technical Analysis forums, part of the Methods category; Hello all, I have been reading about level 2. All the information that I can find is about what is ...

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Old Apr 11, 2009, 11:46am   #1
 
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How to use Level 2 to improve your trading?

Hello all,

I have been reading about level 2. All the information that I can find is about what is actually displayed on the screen in terms of buy and sell orders.


However I am struggling to understand how this information can actually be used to improve your trading.

I would appreciate your comments!

Stylo
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Old Jul 14, 2009, 12:45am   #2
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The simple buy and sell volumes tell you what the players of the game are up to in real time. no matter what anaylsis you do, what matters is what the biggest players do here and now.
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Old Aug 8, 2009, 11:58pm   #3
 
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but the big players can hide their orders by buying and selling in small blocks, time and sales/order flow is what made me £3 million for three years running back in my prop days just on the ES, all you have to do is sit and watch ES with order flow,time and sales, a tick cahrt , within a year you'll be a pro.
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Old Aug 9, 2009, 5:03am   #4
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Well, what it IS good for is seeing when the market is not in order. If leve 2 dries up, something is up (mostly a news release).

I trade YM, and Ihave seen all 5 order depts on one side being less than 20 in total One does not want to be in the market at that time.
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Old Aug 9, 2009, 5:57am   #5
 
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ask tajammy
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"It is not cheap to develop automated systems , mine already cost over $1m. " oildaytrader
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Old Aug 9, 2009, 8:57am   #6
 
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Quote:
Originally Posted by Stylo View Post
Hello all,

I have been reading about level 2. All the information that I can find is about what is actually displayed on the screen in terms of buy and sell orders.


However I am struggling to understand how this information can actually be used to improve your trading.

I would appreciate your comments!

Stylo
It is not as useful as it once was. You need to make up your own mind, but to help here are a few links.

http://www.londonstockexchange.com/p...evel2guide.pdf

Look at Page 8-9


How to Use Level II Stock Quotes for Day Trading: Investment Stocks Tips | eHow.com

Listen to this guy’s message



Short term trading using market depth

Level 2: Video Tutorial With Brian Shannon | Wall St. Cheat Sheet

Points out the lies and pitfalls within level 2 and how you can disguise your true intentions and gives some examples of using it in trading

Charlton
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Old Aug 9, 2009, 11:41am   #7
 
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Originally Posted by NetTecture View Post
If leve 2 dries up, something is up (mostly a news release).

[...] One does not want to be in the market at that time.
Yes and no.

If book dries up means that marketmakers have seen something that you can't see. And they get away to avoid be run over. You better do the same and get out right away.

You don't want to be in the market at that time. But is exactly now when the best opportunity to enter in the market is coming.

Why? Because big players enter now with 'at market' orders. That orders doesn't appear in the book, but is this what really boost the prices (upward or downward).

To summarize, I don't wanna be in the market... I want to be out and enter in that moment, once that I've seen price and volume begin to explode.
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Old Aug 9, 2009, 8:15pm   #8
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The book dries up means that marketmakers have seen something that you can't see.
Or it means they do not dare being in the market. Look at the YM book 5 minutes before FOCM announcement. It dries up. No hidden knowledge - they just await the shakeout like all others.
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Old Aug 10, 2009, 3:30pm   #9
 
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Yes, you're totally right.

I said they can see what you can't, but I meant that they see/feel/suspect/know/guess/venture/infer/surmise or simply wait for something important to happen.

note: Thesaurus works fine
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Old Oct 12, 2011, 9:38pm   #10
 
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Re: How to use Level 2 to improve your trading?

Quote:
Originally Posted by ESguy View Post
but the big players can hide their orders by buying and selling in small blocks, time and sales/order flow is what made me £3 million for three years running back in my prop days just on the ES, all you have to do is sit and watch ES with order flow,time and sales, a tick cahrt , within a year you'll be a pro.
Greetings ES Guy,
korkmeister here. I'm a newbie on day 3 of a 30 day paper trading training program using Equityfeed as my info source. If my daily paper success rate is in the black i'll start using real money. Can you give me your step by step daily actions you took when you were implementing the system you mention above. Thank you. krkmstr.
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Old Aug 15, 2013, 5:16pm   #11
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Re: How to use Level 2 to improve your trading?

Quote:
Originally Posted by ESguy View Post
but the big players can hide their orders by buying and selling in small blocks, time and sales/order flow is what made me £3 million for three years running back in my prop days just on the ES, all you have to do is sit and watch ES with order flow,time and sales, a tick cahrt , within a year you'll be a pro.
Sorry know this is an old post but:

Could you explain to me what "ES" is?

Always interested to learn.

Thank you.
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Old Aug 16, 2013, 1:40am   #12
 
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Re: How to use Level 2 to improve your trading?

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Originally Posted by Benji871 View Post
Sorry know this is an old post but:

Could you explain to me what "ES" is?

Always interested to learn.

Thank you.
It is the SP500 EMini trading instrument. EMini futures contracts. $50 a point, $12.50 a tick.

Cheers
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Old Aug 17, 2013, 5:54pm   #13
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Re: How to use Level 2 to improve your trading?

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Originally Posted by numbertea View Post
It is the SP500 EMini trading instrument. EMini futures contracts. $50 a point, $12.50 a tick.

Cheers
Appreciate it.

Thank you.
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Old Sep 25, 2013, 8:58am   #14
Joined Jul 2013
Quote:
Originally Posted by Stylo View Post
Hello all,

I have been reading about level 2. All the information that I can find is about what is actually displayed on the screen in terms of buy and sell orders.


However I am struggling to understand how this information can actually be used to improve your trading.

I would appreciate your comments!

Stylo
While price charts show you the historical support and resistance, Level 2 can add colour in terms of where orders to buy and sell sit. This combination can help you decide where the price might find support or resistance in due course. If there is a big order for shares at 100p you might not want to sell short at 101p as there is clearly a desire to buy just below which may see the price bid up, hindering your short position. You might want to wait. If you see lots of shares offered at 110p, you might not want to buy around 109p as there is clearly a big desire to sell just above which might hold back your long position. It’s not always perfect, and orders can appear and disappear, but it can save you a few pence here and there which can mount up over time.
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Old Jan 19, 2014, 7:43pm   #15
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Level 2

Level 2 will not you into a proftable trader. It may help a losing trader to become a less losing trader. I would recommend trading with a system that has a positive expectancy.
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